Caterpillar is potential winner if data centers move power generation on-site: Bernstein's Dillard

Watch on YouTube ↗  |  January 16, 2026 at 22:03  |  3:26  |  CNBC
Speakers
Chad Dillard — Senior Analyst, Bernstein

Summary

Chad Dillard of Bernstein discusses how data-center-driven power demand and PJM market rules are making electricity prices a political issue. He views the PJM announcement's 15-year contracts as positive for the broader electrical space and sees a contrarian path where hyperscalers move toward on-site power generation. Dillard names Caterpillar as the biggest potential winner, along with Eaton, Hubbell, Legence, and Quanta Services.

  • Power prices have risen with data center construction and become politically sensitive.
  • PJM's 15-year contracts are expected to unlock about $15 billion of new power plant construction.
  • Dillard sees the PJM announcement as positive for the overall electrical space.
  • Take-or-pay contracts could push hyperscalers toward on-site generation.
  • Caterpillar is cited as the biggest winner from on-site power generation.
  • Eaton, Hubbell, Legence, and Quanta Services are also named as potential beneficiaries.
  • Quanta still benefits from power-line work, though more transmission buildout would be better.
Ideas
Chad Dillard Senior Analyst, Bernstein 1:26
PJM deal lifts electrical space.
The PJM announcement is positive for the overall electrical space because 15-year contracts should unlock about $15 billion of new power plant construction and help ring-fence consumer power inflation concerns.
Electrical space HIGH
Chad Dillard Senior Analyst, Bernstein 1:43
Hyperscalers may shift to on-site power.
There is a contrarian implication in the PJM take-or-pay contracts: because they reduce hyperscaler flexibility and force them to underwrite power plants, hyperscalers may increasingly choose on-site power generation and control their own plants.
On-site data center power generation MED
Chad Dillard Senior Analyst, Bernstein 2:31
Caterpillar wins on on-site power.
Caterpillar is likely the biggest winner if data centers move to on-site generation because it manufactures reciprocating engines and smaller-scale turbines used to power local grids.
CAT HIGH
Chad Dillard Senior Analyst, Bernstein 2:43
Power management complexity lifts Eaton, Hubbell.
Eaton and Hubbell should benefit from on-site generation because bringing power closer within the four walls increases the complexity of power management.
ETN HUBB MED
Chad Dillard Senior Analyst, Bernstein 2:58
Legence benefits from on-site engineering work.
Legence is another on-site generation winner because it provides mechanical, electrical engineering and installation work needed when power is brought on-site.
LGN MED
Chad Dillard Senior Analyst, Bernstein 3:05
Quanta still grows despite on-site shift.
Quanta Services still sees growth even if more power generation moves on-site because it builds power lines; the outcome would be more ideal if more transmission lines were built, but it remains a beneficiary.
PWR MED
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This CNBC video, published January 16, 2026, features Chad Dillard discussing Electrical space, On-site data center power generation, CAT, ETN, HUBB, LGN, PWR. 6 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Chad Dillard  · Tickers: Electrical space, On-site data center power generation, CAT, ETN, HUBB, LGN, PWR